TAMING THE CONTEST BEAST: How to Avoid Contest Catastrophes and - - PowerPoint PPT Presentation

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TAMING THE CONTEST BEAST: How to Avoid Contest Catastrophes and - - PowerPoint PPT Presentation

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TAMING THE CONTEST BEAST: How to Avoid Contest Catastrophes and Create a Winning Promotion ! CMAs Regulatory Affairs Conference for Marketers Toronto, Ontario September 22, 2005 Participants Moderator Bill Hearn, Partner, McMillan Binch

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TAMING THE CONTEST BEAST:

How to Avoid Contest Catastrophes and Create a Winning Promotion!

CMA’s Regulatory Affairs Conference for Marketers Toronto, Ontario September 22, 2005

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Taming the Contest Beast – September 22, 2005

Participants

Moderator

Bill Hearn, Partner, McMillan Binch Mendelsohn LLP

Panelists

Steven A. Kahansky, Associate General Counsel, Tim Hortons Duncan McCready, Executive Vice President, IC Group Inc. Pierre Savoie, Partner, Legault Joly Thiffault Rick Shea, Director, Marketing & Client Services, Resolve Corporation Vandana Taxali, Advertising and Marketing Lawyer

Materials prepared by Jeff Scanlon, McMillan Binch Mendelsohn LLP

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Taming the Contest Beast – September 22, 2005

AGENDA

  • Legal Framework in a Nutshell
  • Interactive Panel Discussion (Contest

S cenarios)

  • Questions

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Taming the Contest Beast – September 22, 2005

TOOLBOX OF MATERIALS

  • Contest Law Primer
  • Appendices

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Taming the Contest Beast – September 22, 2005

THE STARTING POINT

  • Primary obj ectives are usually to sell products

and services, drive traffic to websites and develop consumer databases

  • Creative is King!
  • But don’ t give short shrift to legal compliance

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Taming the Contest Beast – September 22, 2005

THE STAKES ARE HIGH!

  • Canada: Rogers Video – Win a

Film Fantasy

  • “ whisked off to a secret training

base” where “ contract mercenaries and Green Berets teach you all the skills you’ ll need to survive a 3-day paramilitary covert mission in hostile territory.”

  • United States: Pepsi – “Play for

a Billion Dollars” Sweepstakes

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SLIDE 7

Taming the Contest Beast – September 22, 2005

CONTESTS AND THE CRIMINAL CODE

The Skill-Testing Question

  • Paragraphs 206(1)(a) to (d) of

the Criminal Code prohibit schemes for disposing of property by “ any mode of chance”

  • S

upreme Court of Canada has clarified that only games of “ pure chance” are prohibited

  • A proper skill-testing question

converts a game of pure chance into a game of mixed chance and skill

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Taming the Contest Beast – September 22, 2005

CONTESTS AND THE CRIMINAL CODE

“No Purchase Necessary”

  • S

ection 206(1)(f) of the Criminal Code makes it an offence to dispose of any goods, wares or merchandise by any game of chance or any game of mixed chance and skill in which the contestant or competitor pays money or other valuable consideration

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Taming the Contest Beast – September 22, 2005

CONTESTS AND THE CRIMINAL CODE

  • Penalty

Indictable offence punishable by

imprisonment for a term not exceeding two years OR

summary conviction offence

punishable by a fine not exceeding $25,000

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Taming the Contest Beast – September 22, 2005

CONTESTS AND THE COMPETITION ACT

  • Full Contest Rules:

Adequate and Fair Disclosure

Number and approximate value of prize; Area or areas to which they relate; and Any fact within the knowledge of the

contest sponsor that materially affects chances of winning.

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Taming the Contest Beast – September 22, 2005

CONTESTS AND THE COMPETITION ACT

  • Short List Disclosure in Ads:

Packaging Point-of-S

ale

Billboards TV Radio Internet 11

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Taming the Contest Beast – September 22, 2005

CONTESTS AND THE COMPETITION ACT

  • Competition Bureau’ s Program of Binding

Written Opinions

$1,000 fee 2 weeks for “ simple” contests 6 weeks for “ complex” contests 12

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Taming the Contest Beast – September 22, 2005

CONTESTS AND THE COMPETITION ACT

  • Current Penalties
  • Individuals:
  • Up to $50,000 for the first infraction
  • Up to $100,000 for subsequent infractions
  • Corporations:
  • Up to $100,000 for the first infraction
  • Up to $200,000 for subsequent infractions
  • Publication order/ notice
  • Proposed Penalties
  • Individuals – up to $750,000
  • Corporations – up to $10 million
  • Restitution for consumer loss

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Taming the Contest Beast – September 22, 2005

CONTESTS AND QUEBEC

  • Additional Requirements
  • All materials for Quebec residents must be in

French

  • Notice of the contest, together with the applicable

duties, a copy of the contest rules, and the text of any advertisement used in the contest must be filed in advance with the Régie

  • Duties based on the value of prizes available to

Quebec residents must be paid in advance

  • The contest rules must contain certain prescribed

information

  • In certain cases, a security bond with the Régie

may be required

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CONTEST SCENARIOS

Rick Shea Director, Marketing & Client Services Resolve Corporation Duncan McCready Executive Vice-President IC Group Inc. Vandana Taxali Advertising and Marketing Lawyer Steven A. Kahansky Associate General Counsel Tim Hortons Pierre Savoie Partner Legault Joly Thiffault Moderator Bill Hearn Partner McMillan Binch Mendelshon LLP 15

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Taming the Contest Beast – September 22, 2005

SCENARIO ONE

Cont est sponsor would like t o charge cont est ant s a fee or force a purchase t o ent er it s cont est .

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Taming the Contest Beast – September 22, 2005

SCENARIO ONE Discussion Points

  • R. v. Balance Group Int ernat ional Trading Lt d.

(Ont. C.A., 2002)

  • “ Crane Game” case
  • Trial j udge held that crane game was mixed

game of chance and skill

  • Ontario Court of Appeal affirmed

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Taming the Contest Beast – September 22, 2005

SCENARIO ONE Discussion Points

  • Test for defining games of mixed chance and skill

set out in R. v. Ross, Banks and Dyson, S CC 1960:

“ … when the statute speaks of chance as opposed to skill, it is clear that it contemplates not the unpredictables that may occasionally defeat skill but the systematic resort to chance involved in many games such as the throw of dice, the deal of cards.” (Per Pigeon J.)

  • Remember: paragraph 206(1)(e) of the Criminal Code

applies to games of pure skill!

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Taming the Contest Beast – September 22, 2005

SCENARIO TWO

Cont est sponsor has heard st ories of cont est disast ers and want s t o manage cont est risks prudent ly.

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Taming the Contest Beast – September 22, 2005

SELECTED CONTEST MIX-UPS

  • Ultramar (Canada) 2001

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Taming the Contest Beast – September 22, 2005

SELECTED CONTEST MIX-UPS

  • McDonalds (US

and Canada), 2001

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Taming the Contest Beast – September 22, 2005

SCENARIO TWO Discussion Points

  • Promotional partnership agreements
  • Contest rules
  • Other promotion risk management

processes and products

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Taming the Contest Beast – September 22, 2005

SCENARIO THREE

Cont est sponsor is designing an online cont est for which all Canadians are eligible t o ent er. There is no “ age of maj orit y” eligibilit y t hreshold. The cont est sponsor is collect ing informat ion from ent rant s such as t heir address, age, profession, shopping habit s and income bracket . The ent ry form provides t hat ent rant s will receive an addit ional ent ry if t hey “ t ell a friend” about t he cont est .

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Taming the Contest Beast – September 22, 2005

SCENARIO THREE Discussion Points

  • PIPEDA in force in Ontario since January 1,

2004

  • CMA Code of Ethics and S

tandards of Practice re Marketing to kids and teens

  • Quebec’ s An Act Respect ing t he Prot ect ion of

Personal Informat ion in t he Privat e S ect or

  • Depending on structure, “ tell-a-friend”

schemes raise consent issues under PIPEDA

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Taming the Contest Beast – September 22, 2005

SCENARIO FOUR

Cont est sponsor is running a cont est t o award a car prize t hat is open t o all

  • Canadians. Ent rant s can part icipat e only

by filling out a ballot at part icipat ing st ores locat ed in Ont ario. There is no on- line met hod of ent ry.

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Taming the Contest Beast – September 22, 2005

SCENARIO FOUR Discussion Points

  • When must a contest sponsor file with the

Régie?

  • Main requirements for Quebec contests

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Taming the Contest Beast – September 22, 2005

SCENARIO FIVE

Cont est sponsor does not want t o clut t er creat ive in cont est ads wit h legalese and so is reluct ant t o include cont est det ails

  • n packaging or ot her ads.

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Taming the Contest Beast – September 22, 2005

SCENARIO FIVE Discussion Points

  • Competition Bureau’ s “ S

hort List” Disclosure Requirements:

  • Number and ARV of prizes
  • Regional Allocation of Prizes
  • Chances of Winning
  • S

kill-Testing Question

  • Date Contest Closes
  • No Purchase Necessary
  • Where Full Contest Rules Available
  • S

pace permitting, other items may be included for good reasons other than compliance with Compet it ion Act

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Taming the Contest Beast – September 22, 2005

Radio Short-Form Disclosure

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Taming the Contest Beast – September 22, 2005

Tim Hortons “Roll Up the Rim to Win”

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Taming the Contest Beast – September 22, 2005

Esso Contest – Recent Contest

At Roadside At Pump

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Taming the Contest Beast – September 22, 2005

Esso Contest – Recent Contest

At Counter

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Taming the Contest Beast – September 22, 2005

SCENARIO SIX

Cont est sponsor want s t o drive t raffic t o it s websit e and so want s t o run a sweepst akes where ent rant s may only ent er on-line.

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Taming the Contest Beast – September 22, 2005

SCENARIO SIX Discussion Points

  • S

ame basic laws apply

  • Bureau’ s February 2003

Information Bulletin re: Representations on the Internet

  • S

pecial risks to manage:

  • j urisdictional issues
  • glitch disclaimer
  • limit number of entries and

eligibility

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Taming the Contest Beast – September 22, 2005

WRAP-UP

  • Contest scenarios are not exhaustive
  • Money other hot spots, such as

deceptive prize notices cross-border contests involving US

residents

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SLIDE 36

Taming the Contest Beast – September 22, 2005

WRAP-UP

  • Avoid common hazards
  • Address regulatory concerns
  • Address contractual concerns
  • S

kipping legal advice may be false economy

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Taming the Contest Beast – September 22, 2005

Questions?

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